Real-world assets could revitalize dying NFT lending market: DappRadar

Real-world assets linking up with non-fungible tokens (NFTs) is 1 of a fewer cardinal catalysts that could reignite the waning NFT lending sector, which is suffering from a illness successful volumes and idiosyncratic activity, says blockchain analytics level DappRadar.

Volumes successful the NFT lending market, which allows NFT holders to instrumentality retired a loan against their token, person dropped 97% from a highest of astir $1 cardinal successful January 2024 to $50 cardinal successful May, DappRadar expert Sara Gherghelas said successful a May 27 report.

Gherghelas said for NFT lending to “move beyond endurance mode,” it needs “new catalysts” to reignite the sector, specified arsenic real-world plus NFTs, similar tokenized existent property oregon yield-bearing assets that could unlock much stable, trusted collateral sources.

“So far, 2025 has not delivered a compelling crushed for NFT lending to bounce back,” she said. “While the infrastructure is inactive present and the platforms stay active, enactment has slowed crossed the board.” 

Borrower and starring enactment person taken a large deed successful the NFT lending sector. Source: DappRadar

“For now, the assemblage seems to beryllium successful a holding pattern, waiting either for marketplace betterment oregon a caller usage lawsuit to reignite interest.”

Gherghelas added that different catalysts that could rekindle NFT lending were tools that marque it easier for NFT holders to get against their tokens, and that protocols should make “smart infrastructure” specified arsenic undercollateralized loans, recognition scores and artificial quality hazard matching.

The study adds that since January past year, borrower enactment has declined by 90% and those consenting to lend person shrunk by 78%.

The mean NFT indebtedness size has besides taken a deed from a highest of $22,000 successful 2022 to $4,000 successful May, a 71% year-over-year drop.

Gherghelas said this displacement “shows that either users are borrowing against lower-value assets oregon simply becoming much blimpish with leverage.”

NFT lending wide trading measurement and marketplace enactment person dropped disconnected from the all-time highs of past years. Source: DappRadar

The mean loan duration is besides lower; aft hitting an mean of astir 40 days successful 2023, it’s been down to 31 days and has held dependable passim 2024 and into 2025.

Gherghelas said this could bespeak that “loans are being taken much often but for shorter periods, possibly a motion of much tactical liquidity plays.”

NFT market downturn besides hurts lending

Part of the slowdown successful NFT lending is connected to the wide NFT marketplace decline, which has seen volumes drop 61% successful the archetypal 4th to $1.5 cardinal compared to $4.1 cardinal a twelvemonth ago.

“With collateral worth collapsing, the lending enactment people followed,” Gherghelas said. “There are a fewer exceptions that managed to clasp oregon regain traction, but they’ve been outliers, not capable to assistance the sector.”

Related: AI decentralized apps are coming for the Web3 throne: DappRadar

The protocol scenery has besides narrowed, and the fig of progressive NFT lending apps is limited, with lone 8 protocols holding immoderate meaningful share.

“The flip-for-liquidity exemplary that worked during bull markets isn’t built for a quieter, much risk-averse environment. But that doesn’t mean NFT lending is finished; it’s simply shifting focus,” Gherghelas said.

“Platforms are diversifying, usage cases are shifting, and collateral preferences are changing. If the adjacent question builds connected utility, culture, and amended design, NFT lending mightiness conscionable find its 2nd upwind — 1 built to last.”

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